Why Nations Fail: The Origins of Power, Prosperity, and Poverty

particular, just prior to Perón’s election as president, the Court had
issued a decision ruling that Perón’s new national labor relations
board was unconstitutional. Just as Roosevelt heavily criticized the
Supreme Court in his 1936 reelection campaign, Perón did the same
in his 1946 campaign. Nine months after initiating the impeachment
process, the Chamber of Deputies impeached three of the judges, the
fourth having already resigned. The Senate approved the motion.
Perón then appointed four new justices. The undermining of the
Court clearly had the effect of freeing Perón from political
constraints. He could now exercise unchecked power, in much the
same way the military regimes in Argentina did before and after his
presidency. His newly appointed judges, for example, ruled as
constitutional the conviction of Ricardo Balbín, the leader of the main
opposition party to Perón, the Radical Party, for disrespecting Perón.
Perón could effectively rule as a dictator.
Since Perón successfully packed the Court, it has become the norm
in Argentina for any new president to handpick his own Supreme
Court justices. So a political institution that might have exercised
some constraints on the power of the executive is gone. Perón’s
regime was removed from power by another coup in 1955, and was
followed by a long sequence of transitions between military and
civilian rule. Both new military and civilian regimes picked their own
justices. But picking Supreme Court justices in Argentina was not an
activity confined to transitions between military and civilian rule. In
1990 Argentina finally experienced a transition between

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democratically elected governments—one democratic government
followed by another. Yet, by this time democratic governments did
not behave much differently from military ones when it came to the
Supreme Court. The incoming president was Carlos Saúl Menem of
the Perónist Party. The sitting Supreme Court had been appointed
after the transition to democracy in 1983 by the Radical Party
president Raúl Alfonsín. Since this was a democratic transition, there
should have been no reason for Menem to appoint his own court. But
in the run-up to the election, Menem had already shown his colors.
He continually, though not successfully, tried to encourage (or even
intimidate) members of the court to resign. He famously offered
Justice Carlos Fayt an ambassadorship. But he was rebuked, and Fayt
responded by sending him a copy of his book Law and Ethics, with the
note “Beware I wrote this” inscribed. Undeterred, within three
months of taking office, Menem sent a law to the Chamber of
Deputies proposing to expand the Court from five to nine members.
One argument was the same Roosevelt used in 1937: the court was
overworked. The law quickly passed the Senate and Chamber, and
this allowed Menem to name four new judges. He had his majority.
Menem’s victory against the Supreme Court set in motion the type
of slippery-slope dynamics we mentioned earlier. His next step was to
rewrite the constitution to remove the term limit so he could run for
president again. After being reelected, Menem moved to rewrite the
constitution again, but was stopped not by Argentina political
institutions but by factions within his own Perónist Party, who fought
back against his personal domination.
Since independence, Argentina has suffered from most of the
institutional problems that have plagued Latin America. It has been
trapped in a vicious, not a virtuous, circle. As a consequence, positive
developments, such as first steps toward the creation of an
independent Supreme Court, never gained a foothold. With pluralism,
no group wants or dares to overthrow the power of another, for fear
that its own power will be subsequently challenged. At the same time,
the broad distribution of power makes such an overthrow difficult. A
Supreme Court can have power if it receives significant support from

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broad segments of society willing to push back attempts to vitiate the
Court’s independence. That has been the case in the United States, but
not Argentina. Legislators there were happy to undermine the Court
even if they anticipated that this could jeopardize their own position.
One reason is that with extractive institutions there is much to gain
from overthrowing the Supreme Court, and the potential benefits are
worth the risks.